Also to add,
The USD had a sharp climb post Jun 2018.
Also the taxes on RE transactions hit the actual gains
USD has global liquidity, on spot, RE doesn't enjoy same privelege.
*Not to advocate one above the other but some worthwhile considerations.
The way we are dying to join communist Russia & China, I am fearful now that free world will shut down their financial system on us and dollar will climb past even 2000 mark. But in that case even real estate become worthless. Recent changes in State Bank and on Tax collection front are indicating something is not right.
We have many such examples like Iran, North Korea, Cuba, Venezuela......
Brother, unfortunate fact all over our history. We don't join Communism, Capitalism, Marxism, Socialism etc. We as a state have followed quick bucks, wherever they take us!
The tragedy about chasing quick bucks, over least bit of principle is that you end up paying way more than you earned. Not a big deal, earning goes into few pockets, payback comes to the entire nation!
This has happened, is happening, will happen!
Imran dear,
So far we're behaving like good kids. Coze if we were a naughty boy, we would have been treated like Venezuela (1 USD to 1.2 million Boliver) or Iran (1 USD = 42,025 Irani Riyal).
As all kids behave good under a "stick" so are we under FATF.
Rupee decline was the doings of Arstoo of IMF made head of State Bank, who moved his magic wand to get some sizzling hot money at 13% rate encashed at 30% declined currency. Now that the sizzler is gone cold (as it does in a Chinese restaurant) so the policy rate and dollar both are coming down.
@isloo1 There is a simple economic reason for our devaluation and it is political meddling of our state bank. State bank ensures that inflation remains low and our currency remains stable but governments since the 2000s have been printing more and more money to cover their deficits which in turn increases inflation and devalues our currency. Now this practice has finally come to an end so natural devaluation and appreciation of currency will only take place if our foreign reserves go up or down.
Currency print out by state bank all organic now?
If that's happening since 2000s what triggered the PKR in just 2 years that it's shed it's value by 45% - 50% in just 24 months ...
In an import-driven system, you can never sustain/stabilise currency value for 2 decades by simply printing out the cash. It starts to meltdown even after completing 1 Fiscal Cycle.
Also to mention, you cannot get GDP to rise, years on, just by printing the notes.
@imtiaz PMLN government (really just Ishaq Dar) believed in strong PKR policy so they artificially tried to uphold its value. I think reports have came out recently mentioning how billions of USD was spent by PMLN to keep PKR overvalued... State Bank was always of the view that PKR should be determine by free market rate and not any political meddling. When PTI government came in, they had similar views so PKR came to its natural position and now it is free market rate.
Now whether PKR appreciates or depreciates depends on foreign reserves as well as export/import ratio.
Brother I dont deny that PKR havent been manipulated or its value being adjusted, whichever Govt came in. I am simply pointing to a blanket statement that 'since 2000s, more printing was among one factors to keep it artificial.'
For the record, till date SBP has no autonomy. Though IMF is in demand to do that to comply for next tranche of the loan.
SBP to be made autonomous in line with IMF terms
https://www.dawn.com/news/1611663
I am not sure if Free Market shakes PKR from 115 to 165+ and back to 152 in a frame of just 24 months. The Foreign Reserved were lowest in 2013 since 2000 but PKR stood at 100-104 range
The Disaster in Fiscal/Monetary/Economic Policy has ousted 2 Fin. Ministers in 2 years and no one willing, as of now to be the next scapegoat. This is where the facts stand.
As an outside observer with expertise in credit markets (read: risk obsessed). I'm actually cautiously optimistic about Pakistan. It feels like we have finally managed to get some momentum on not actively self-sabotaging ourselves. We just need to get some of the reforms through and tie future Govts in them so the playground rules change.
As for China, I don't think people truly appreciate that they are literally watching the emergence of a superpower. You hear these things but the true scale is hard to appreciate unless you are in the markets. Competition in that space is fantastic, though of course there will some conflict. This time superpower happens to be our neighbour and we are on friendly terms with them. They are also extremely competent and strategic in how they execute. No free deals from the Chinese but that is hardly unfair.
Even China central bank manipulates their currency against USD, they even use commercial banks to pump dollars in and out to keep currency at a desired level.
As far PMLN, it was money well spent to keep USD around 100, because it kept prices of essential commodities and utilities stable and protected the common Pakistanis. That is why people of Pakistan were more confident in their economy during PMLN tenure.
I never voted for PMLN in my life but have to admitt that Nawaz was the best PM and Ishaq Dar was the best FM anyone can ask for.
Their fault = they refused to bow down to a group who only wants to fill their pockets and refuse to let Pakistani awam have any control over the future of their motherland.
Imran sb, PMLN is not punished because they have refused to bow down infact they are ready to do it now but they are being punished for their stupidity. There is a reason they are known as Patwaris (not the Nelson Mandella) :) The problems in our system are very old and they take due time to get resolved. There is a reason NS is not facing cases here in Pakistan because they know they have so many things to hide. These paper tigers can’t even eye contact with that group you are referring to.
Another issue of our nation is we consider that person as most incompetent who is not corrupt.
Imran brother,
agreed to your last point. The folks, here on forum, all over social media, and in this qoum are (1) Either Too Afraid, (2) Too Naive to call wrong as Wrong. Unless such model fixed, fast forward another 70+ years and it will be a bigger mess.
Ammar sb,
its an unfortunate fact that in a Nation full of Jiyalay, Patwari, Youthiay and so on are not gonna get to the point where we even think of Nelson Mandel.
I would respectfully disagree, not to defend any power corrupt people but for the sake of setting the record straight. Can you please share the number or percentages of PML-N folks out. Except for NS and Dar a party with tens of former Ministers and Law Makers are all in PAK and being persecuted since 2018. Even district-level or social media representatives are being called into NAB/FIA daily basis. Any substantial evidence? Any recovery?
I am sure, you will be well aware of the judge that on record confessed that he was blackmailed via a private video for the verdict. When you are being persecuted, you have the right to play the game the way rules are set.
Now compare that with mega scandals regarding Party Funding, BRT, Billion Tsunami, Malam Jabba, Helicopter reference etc. Did NAB, to date issued a single reference let alone.
Willing to Bow Down and you will get the Throne Tomorrow!
@Imran A.
The difference between US/China and Pakistan manipulating national currencies is that US and China have megaeconomies which are well-developed... They have an extraordinary amount of resources so they can afford to tinker with their exchange rates. Ishaq Dar was thinking Pakistan could afford to do the same but he totally underestimated our economy's potential and the fact that we clearly did not have the economic development nor the tax collection required to sustain manipulation of PKR. Honestly speaking, Pakistan has never had a good finance minister but certainly Ishaq Dar is one of the worst.
Dar expertise are that of a Book Keeper. Those Expertise can help manage left and right of accounts but Economic Management is a Far Complex Equation to Manage and that needs only a visionary and we don't like such visionary whether that's PP, PML, PTI or the dictator guy.
The core to PRC's intentional devaluation of Yuan is increased exports! Expanding into European/American Markets, More Stuff, Less Bucks is what helped PRC to capture those markets and pushed almost all competitors out in general and low tech stuff.
Having said that, personal bias can be one thing, data and rationale is another thing that doesn't care about individual's likes dislikes it reflects as things are.
Pick the Fin. Minister of your choice from 2000s and compare that to Dar from 2013 - 2017 (GDP, Inflation, Infrastructure, Development etc.)
Where is the competition? Umer and Shaikh booted out in half the tenure, nose driving GDP. Dar is no less of a Moron but the guy had the spine to hang-on and lift GDP five years on from 3.6 to 5.6
@imtiaz
Ishaq Dar was only looking for short-term gains so PMLN could remain popular and win re-election. Ishaq Dar did a massive amount of damage to our economy in the long run and now PTI is dealing with the mess Ishaq Dar left behind... I am not a fan of PTI but they are doing making some good, strategic and long-term economic decisions. If Ishaq Dar was still our FM, we would be getting bailed out right now.
Asad sb, I think it would be enlightening and I sincerely look forward to read through and get to know more about the facts/data/numbers that synchronize with the statements.
Else they just read subjective, lacking substance, reflecting more of a personal view.
One of the core and most genuine indicators of economic growth, verified independently by the likes of IMF/WB is GDP. In economies that work in a global context, you cant fabricate something years on.
Besides, I never got the idea, why Tareen, Shaikh who are blamed (from PP economic mess) are brought in to fix the same. You don't ask to fix the same guy who, as per ones claim broke that at the first place.
Umer was hailed as the best economic brain of PTI but couldn't last even 1 year!
Why the long-term, strategically beneficial economy is shooting for the heads of those that are working since day 1 to make it strategic?
This is such a joke that dar created artifical growth in gdp. He had only controlled dollar but that was in acceptable range and it is done everywhere in the world. But why we forget the plus sides of that range bound controll. Can any investor or business ever think of any business plan when currency continuously devalues upto the level of 45% in just 1 year?
For a fair credit, just see some undeniable facts.
-Receiving GDP at 3.0 in 2013 and then taking to 5.8, a dream now.
-Inflation getting in 2 digits and bringing down to 2% or 3%.
Load sheding of 12-20 hours to zero and surplus.
Solving gas shortage. People forgot the lines before CNG.
No scandal like we see now a days of sugar, petrol, medicine.
The most transparent auction of 3G/4G
Inamullah sb, unfortunately in cult following data/facts/numerics are taken as an offense ...
'Khan sahab agar mulk tabah ker rahay hain tu mujhay Khan par poora bharoosa hai thek hi ker raha hoga' (situation these days)
As far as the guy himself, morally he is a gonner long ago. Technically, he will not until he licks back all that he used to spit out on others while in container mode!!
It all comes to GDP growth. Once GDP expands, loan to gdp ratio automatically decreases. ISHAQ Dar mastered that art and economy was growing at 5.8%.
Imran Khan and his sponsors had a well crafted plan to takeover, which they did flawlessly, but they had ZERO plan to manage the economic fallouts of such political shocks.
Now even after record loan taking, after record debt relief recieved due to corona, record financial support from China, Middle East and others; they are still unable to manage and grow.
Very self centered individuals who thinks their plan is the ultimate plan which must be adopted by 20 crore people, even if this plan throws Pakistan down the fire lane for good!
How do you reason with someone like this.......